says New VAT to aid New Minimum Wage Implementation
holds NES#25 in October
By Emmanuel Elebeke
The Federal Government says it is fine-tuning arrangements to embark on the development of 30 year economic development plan.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, dropped the hint in Abuja on Monday at the media briefing in preparation for the 25th Nigerian Economic Summit (NES#25).
The minister said the plan became imperative because Vision 20:2020 and the present administration’s Economic Recovery Growth Plan(ERGP2016-2020), would expire next year. In view of this, she explained that the requires a long term economic development plan to guide her activities going forward.
‘‘A vision document is a document that helps to plan where you want to be in the next couple of years. So, the Vision document for us in the Planning Ministry is expiring by 2020 and also the ERGP. So immediately after this, we will be taking inputs from the Summit and we will be starting another development plan which may be 30 year plan.
‘‘The plan may be (2021-2050) or 2021-2040. We hope that there will a group drawn from the public, private, states, local government areas, development partners to develop it. I can confirm to you that a lot of things have been achieved following the implementation of Vision 20:2020 and ERGP, which was drawn from Vision 20:2020.”
Speaking further, the minister noted that achieving food security and self-sufficiency in rice production by 2018 were part of the cardinal pillars of ERGP, a feat Nigeria had already attained, particularly self-sufficiency in rice production.
“I am happy to say that this has been achieved. Nigeria has achieved self-sufficiency in rice, but also the milling capacity, to the extent that we do not need imported rice into this country.”
When questioned on the recent 2.2% increase in the Value Added Tax, VAT from 5per cent to 7.2per cent, the minister explained that the Federal Government approved the increase in order to raise revenue for the implementation of the new minimum wage.
Ahmed further explained that 85percent of the proceeds of VAT would be allocated to States and local government areas, while only 15per cent of the funds would be allocated to the Federal Government.
“This increase is one of the recommendations of the committee. It is going to be implemented as part of the conditions for the implementation of minimum wage. We are going to do consultations with the National Assembly.
“Let me use this opportunity to say that VAT is a consumption tax. It is not applicable on food, transport, even education. If you decide to go to market to buy food, you are not paying VAT, but if you decide to go to restaurant to eat, the restaurant has added value by taking the food and presenting it in a way you like, so you are going to pay VAT. So VAT is a consumption tax,” the minister said.
Speaking on this year’s NES#25 themed: “Nigeria 2050: Shifting Gears”, Ahmed urged Nigeria to move to a more robust competitive private sector economy. She also called for deliberate action on the projected population of the country hitting over 400million by 2050 with 65per cent of the population under the age of 35.
“It is only a competitive private sector led economy that will drive this process and ensure economic prosperity for all Nigerians. Let me say that to ensure a competitive economy, we must have stable macroeconomic conditions and business climate that will keep transaction costs low, thereby encouraging savings, investment and job creation.
“Nigeria’s economic prosperity depends on the productivity of our human and natural resources,” she said.